Raising cash for companies which have just had their initial public offerings (IPOs) is a tough task and companies often resort to a follow-on share offering in order to raise the necessary cash to expand their businesses. In a fresh development, tech companies in China have now dipped their hands into follow-on share offerings in order to raise money and according to sources; the Chinese video app Bilibili has raised a staggering $824 million from such an offering on Wednesday. The company is one of the many Chinese tech companies which had its IPO in the United States, and now they have returned to the same capital markets for the second round of capital raise.
Other than follow-on offerings, China’s tech firms are also looking at convertible bonds as a way of raising further capital, and in addition to Bilibili, many other firms are expected to make a return to the US capital markets this year. In addition to Bilibili, other Chinese tech companies like iQiYi, and NIO have returned to the capital markets to raise more capital. According to those who are familiar with the developments, Bilibili sold convertible bonds worth $300 billion and sold 18 million discounted shares at $18 each. The company’s share price stood at $18.05 when they were issued. The convertible bonds have a lock-in window of seven years.
Bruce Wu, who works as one of the heads of the Greater China equity markets at City, said,
“A lot of companies that went public last year didn’t raise as much money as they wanted to. It’s probably fair to assume that quite a number of them should revisit capital markets to see what kind of additional capital raises are possible for them, whether it’s through follow on offerings, through convertibles or a combination.”
When Bilibili had its IPO last year, it raised $483 million, and since then, the shares in the company have shown handsome gains. The new capital raise is aimed at making the platform far more enticing for users by way of investment towards content, research and takeover of firms that might be useful towards the further growth of the company. Some of the companies which had listed in Hong Kong are also expected to return with follow on offerings, and it could well turn out to be a year of such offering for Chinese tech firms.